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Harper Government Announces New Requirements for Canadians With Offshore Property and Income

TORONTO, ONTARIO--(Marketwired - June 25, 2013) - The Honourable Gail Shea, Minister of National Revenue and Minister for the Atlantic Canada Opportunities Agency, today announced the launch of a strengthened Foreign Income Verification Statement (Form T1135), one of the Economic Action Plan 2013 measures to crack down on international tax evasion and aggressive tax avoidance. Minister Shea also met with members of the Certified General Accountants Association of Canada (CGA-Canada) to discuss taxation issues, including how best to combat international tax evasion and aggressive tax avoidance.

"Our Government is committed to combating tax evasion and getting tough on tax cheats. We have introduced important new measures to strengthen the Canada Revenue Agency's ability to audit and investigate taxpayers who may be hiding offshore property," said Minister Shea. "Stronger reporting requirements will provide the CRA with more information to crack down on those who attempt to cheat the system."

Starting with the 2013 taxation year, Canadians who hold foreign property with a cost of over $100,000 will be required to provide additional information to the Canada Revenue Agency (CRA). The criteria for those who must file a Foreign Income Verification Statement (Form T1135) has not changed; however, the new form has been revised to include more detailed information on foreign property.

Increased reporting requirements include:

the name of the specific foreign institution or other entity holding funds outside Canada;

the specific country to which the foreign property relates; and

the income generated from the foreign property.

The CRA will use the additional information to ensure all taxpayers comply with Canadian tax laws, through activities including education and audit. Failure to report income from domestic or foreign sources is illegal, and Canadians should know that the CRA actively pursues cases of non-compliance. Tax evasion and aggressive tax avoidance can lead to significant taxes, interest and penalties.

These measures will build on the recent commitments made by Prime Minister Stephen Harper at the G-8 Lough Erne Summit in Northern Ireland. The G-8 declaration and the Harper Government's Action Plan on Transparency of Corporations and Trusts will uphold a high level of transparency.

"I am proud that our Government is protecting law-abiding Canadians by providing the CRA with the tools necessary to go after tax evaders. Since 2006, we have introduced over 75 measures to improve the integrity of the tax system," said Mark Adler, Member of Parliament for York Centre. "New measures outlined in Economic Action Plan 2013 to tackle international tax evasion and aggressive tax avoidance will result in concrete benefits for all hardworking Canadians. I am pleased that our Government is engaged with stakeholders about this serious and pressing issue."

Economic Action Plan 2013 also proposes to extend the reassessment period for a tax year by three years if a taxpayer has failed to report income from a foreign property on their income tax return and Foreign Income Verification Statement (Form T1135) was not filed, late-filed, or included incorrect or incomplete information concerning a foreign property.

"We are pleased to see the Government taking action on this important issue. Increased reporting requirements of large offshore assets will help to ensure that all Canadians are operating on a level playing field when it comes to their taxes," said Carole Presseault, Vice President of Government and Regulatory Affairs at CGA Canada. "Our members support the fight against tax evasion, as it hurts all Canadians by reducing government revenue that other law abiding taxpayers are required to make up, and providing an unfair advantage to those seeking to cheat the system."

In addition to the new filing requirements, Economic Action Plan 2013 proposed other strong new measures to combat international tax evasion and aggressive tax avoidance. These include:

the new Stop International Tax Evasion Program;

the mandatory reporting of international electronic funds transfers over $10,000 to the CRA; and,

streamlining the judicial process that provides the CRA authorization to obtain information from third parties such as banks.

Minister Shea also recently announced the creation of a dedicated team to implement these measures and a $30 million investment to target international tax evasion and aggressive tax avoidance.

FOR BROADCAST USE:

The Honourable Gail Shea, Minister of National Revenue and Minister for the Atlantic Canada Opportunities Agency today announced the launch of a strengthened Foreign Income Verification Statement, one of the Economic Action Plan 2013 measures to crack down on international tax evasion and aggressive tax avoidance. Minister Shea noted "stronger reporting requirements will provide the CRA with more information to crack down on those who attempt to cheat the system."